Markets Are Dipping: Should You Sell, Buy, or Panic?

When geopolitical tensions ripple through the markets—as we’ve seen over the last 18 months—investors tend to fall into two camps. Some want to "get out" to stop the tumble, while others want to "get in" at the absolute bottom.

As a former financial advisor, I’ve handled those stressful phone calls. I know how hard it is to watch your hard-earned balance go red. But before you make a move driven by panic, I want to share two charts that completely changed how I view market "shocks."

1. The History of Shocks (and Recoveries)

We often feel like the current crisis is the one that will finally break the market. But if we look back at the S&P 500 benchmark over the last 80+ years, we see a consistent pattern.

Whether it was Pearl Harbor in 1941, the Suez Crisis, or more recent events like the 2021 Afghanistan withdrawal, the story is the same: A sharp dip followed by an inevitable recovery. The key takeaway? While it took an average of 189 days to recover from prolonged tensions like the invasion of Kuwait, that is a blink of an eye for a long-term investor. If your goal is 5+ years away, a 20 or 60-day recovery period is just a bump in the road. The recovery happens—but only for those who stay in the game.

2. The Danger of "Timing the Market"

The second chart I live by shows the cost of missing out. Between 2003 and 2022, if you had invested $10,000 and left it alone, your returns would be substantial. However, if you tried to "time the market" and missed just the 10 best days, your returns would be cut nearly in half.

Here’s the wild part: Seven of the ten best days in market history took place during Bear Markets (when things looked the worst). In fact, the second-best day in 2020 happened immediately after the second-worst day.

The "Everyday Investor" Strategy

If you have access to million-dollar data tools and 24/7 analysis, you might try to time these swings. But for the rest of us—the everyday investors who want to grow wealth without losing sleep—the data is clear:

• Don't be a "headless chicken": Selling during a dip locks in your losses and ensures you miss the recovery.

• Avoid the "Perfect Point" trap: Trying to find the absolute bottom is a losing game.

• Stay Invested: Consistency beats "perfect" timing every single time.

Geopolitical shocks are just that—shocks. They are loud, they are scary, but historically, they are temporary.

Feeling the market jitters?

The best way to fight investment panic is to have a solid plan before the dip happens. My "Five Fantastic Funds" framework is built to help you ride out these exact bumps.